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Sir Terry Leahy, CEO, Tesco Plc

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  July- August 2009


Sir Terry Leahy, CEO, Tesco Plc For Sir Terry, Tesco’s core purpose is ‘to deliver value for customers to earn their lifetime loyalty’. There is no mention of products, no reference to the bottom line or market share, but a clear focus on people - the customers.

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Four interrelated global crises are mutually reinforcing each other: climate change, the energy crisis, the food crisis and the financial and economic crisis. The consequences of these crises for development are decisive.

However to some entrepreneurs and statesmen, ‘a recession is not a time to be mourning lost opportunities, but a time to be finding new ones.’ How one can find gold nuggets of opportunity in bad times will make a difference to many economies and people in the developing world and will usher a new financial hierarchy in the coming decade.

The multiple crises call for a moment of global reflection and stocktaking. More focus is being put on the demand side of development in what is up to now a largely supply-driven system.

In recent years economic development in the emerging markets of Asia has been driven chiefly by booming exports. Between 2004 and 2008 real gross domestic product (GDP) in the region rose by an average of 8 percent per annum, catapulting Asia to what is by far the most dynamic region in the world. But now, with world trade languishing under the global financial and economic crisis, Asia is feeling the full brunt of its reliance on exports.

The scion of Indian industry, the Tata group of India in the midst of gloom and uncertainty launched its INR 1 lakh ($2500 approximately) car, mainly targeted to the common man in India on March, 2009.

The car is expected to change in auto market in India and more geographies, and has made many competitors revisit their boardrooms. The car booking period closed with a spectacular 0.2 million units being booked with advance payments and a waiting period spanning a year.

Whether born or made, entrepreneurs have an inherent ability to think differently, to challenge the status quo and to surround themselves with truly exceptional people.

AirAsia, a scrappy budget airline based in Malaysia, shows the potential of the regional market. In 2001, entrepreneur Tony Fernandes took a bankrupt carrier and relaunched it with just two planes flying out of Kuala Lumpur.

Thanks to liberalisation of air travel in much of the region, Fernandes has ramped up to 81 aircraft and 122 destinations in 16 countries—often smaller cities others had ignored. He expects to carry 24 million passengers in 2009, up 30 percent from last year. "We focused on building an Asean brand," says Fernandes. "We saw a huge opportunity no one was exploiting."

Painful economic slowdowns are nothing new to Southeast Asia. The region went through its own gut-wrenching financial crisis more than a decade ago in what now seems like a dress rehearsal for today's turmoil.

Companies defaulted, banks collapsed, stock markets tanked, and economies shrank at double-digit rates as foreign investment slowed to a trickle. But Southeast Asia dutifully swallowed the bitter pill of austerity, devaluing currencies and working off debt while banks restructured and companies patched up balance sheets.

Yet this downturn is hardly a full-blown repeat of the Asian crisis. That's testament to the surprising strength of the 10 countries that belong to the Association of Southeast Asian Nations (Asean).

The region's banks are virtually free of toxic assets and haven't needed government bailout money. Years of trade surpluses and high savings rates have contributed to record foreign reserves. Debt loads—for governments, corporations, and consumers—are a fraction of those in the US and Europe, and inflation and interest rates have fallen dramatically.

"Of course there is a slowdown, but [these countries] are well prepared to weather the storm," says Mark Mobius, president of Templeton Emerging Market Funds. "They have outperformed global markets, which is telling us they are going to do quite well."

Asean bourses have led the recovery in emerging-market stocks, with Jakarta's benchmark index up 70 percent and Vietnam's up 80 percent from recent lows.

Southeast Asia's strength is an encouraging sign that the region is still a player. Though it may have been half-forgotten by many investors since the crisis, its educated workers, natural resources, and—in some countries, at least—first-class infrastructure make it worth paying attention to. Read the Complete Article Subscribe to ASEANAFFAIRS Magazine


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